Economic complexity: conceptual grounding of a new metrics for global competitiveness

A new non-monetary metric captures diversification, a dominant effect on the globalised market, and the effective complexity of products.

Journal of Economic Dynamics and Control 37, 1683 (2013)

A. Tacchella, M. Cristelli, G. Caldarelli, A. Gabrielli, L. Pietronero

We introduce a novel method to define a self-consistent and non-monetary metrics for the competitiveness of countries.

The availability of data corresponding to the products exported by all countries provides an excellent dataset to test economic ideas and extracts new information about the process of economic development. The matrix of countries and exported products shows a marked triangular structure instead of the block-diagonal structure expected from Ricardian arguments of specialization. This observation points to the fact that diversification is instead the dominant effect in the globalized market. We discuss how to define a suitable non-monetary metrics for the value of diversification and the effective complexity of products. We discuss in detail the previous proposed approaches to assess this challenge and their limitations. We introduce a new approach to the definition of these metrics which seems to overcome the previous problems and we test it in a series of model systems.

More in Economic complexity

  • Physical Review E

    Bipartite trade network

    A new algorithm unveils complicated structures in the bipartite mapping between countries and products of the international trade network.

  • PLOS ONE

    Measuring the intangibles

    Coupled non-linear maps extract information about the competitiveness of countries to the complexity of their products from trade data.

  • PLOS ONE

    Taxonomy and economic growth

    Less developed countries have to learn simple capabilities in order to start a stable industrialization and development process.

  • PLOS ONE

    Dynamics of economic complexity

    Dynamical systems theory predicts the growth potential of countries with heterogeneous patterns of evolution where regression methods fail.

  • PLOS ONE

    Network analysis of export flows

    Network theory finds unexpected interactions between the number of products a country produces and the number of countries producing each product.